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Speaker 1: from house Stuff Works dot com? Hey, and welcome to
Speaker 1: the podcast. Hi Chuck, Hi Josh. How are you doing?
Speaker 1: I'm great, man, How are you? Okay? I'm all right. UM.
Speaker 1: I know for a fact that you are fully aware
Speaker 1: of the seven billion dollar bailout. So don't say you're
Speaker 1: not the what the seven dollar bailout? The seventy dollar bailout?
Speaker 1: If only? Yeah, yeah, here's you are aware. Sure, I'm
Speaker 1: somewhat politically inclined. That's good. That's good. So, UM, I
Speaker 1: was watching uh an unnamed TV cable news network which
Speaker 1: is called CNN, an unnamed one, and um, basically, uh,
Speaker 1: I was watching basically just coverage of this bailout what
Speaker 1: it means all this. I'm hooked on the bailout. Okay,
Speaker 1: if you haven't figured it out by now, I just
Speaker 1: I eat information up right, you should get a T shirt.
Speaker 1: I'm hooked on the bailout. I'm hooked on cash cary. Right. Yeah,
Speaker 1: So I was this this one commentator, this one pundit
Speaker 1: um was saying, so long free market, and I was thinking,
Speaker 1: you're stupid, you're a stupid person because we don't have
Speaker 1: a free market. Did you know that? Well, of course
Speaker 1: I do. We never had a truly free market. Well
Speaker 1: maybe and early on, yeah, in the early heady salad
Speaker 1: days trading America. Yeah yeah, I'm whiskey right, or bracelets
Speaker 1: and trinkets first for large tracts of land or hemp.
Speaker 1: That was a big one early on s Yeah. So
Speaker 1: um yeah, I'm I'm glad to hear you say that.
Speaker 1: I find it refreshing most people when you say what
Speaker 1: kind of economy does the United States have? They say
Speaker 1: it's a free market economy. And that's just false. And
Speaker 1: let's talk about why it's false. Let's do it. I
Speaker 1: think we should. Um, so basically the one Well, how
Speaker 1: about this. Let's describe a free market economy under the
Speaker 1: capitalist system, and then we can say this is why
Speaker 1: the US doesn't have one of those. Okay, all right,
Speaker 1: so you know who the fought their capitalism was right? Yes,
Speaker 1: Charles Darwin? Darwin, Yes, you know, terrible Adam Smith economist,
Speaker 1: extraordinary and this guy was working from nothing, right, this
Speaker 1: is all just out of this guy's head. He was good. Um,
Speaker 1: he actually wrote The Wealth of Nations, uh in seventy
Speaker 1: so it can't. Yeah, exactly. So the US is like,
Speaker 1: what kind of economy we should we should we have?
Speaker 1: What are they doing over in Scotland? They heard about
Speaker 1: this Adam Smith fella. They bought hom over boughttom dinner
Speaker 1: and he told them everything they needed to know. And
Speaker 1: it's a great theory. Capitalism in theory is great, Okay.
Speaker 1: So basically, when you have a bunch of people that
Speaker 1: have a bunch of products that the there's the supply
Speaker 1: outpaces demand, prices come down exactly. It protects just the
Speaker 1: average consumer like that when you know, when when demand
Speaker 1: is high and supplies kind of low, um, then companies
Speaker 1: are protected. And it's this constant swing back and forth
Speaker 1: between protection for consumers and protection for producing system checks
Speaker 1: and balances, and ultimately whichever one is benefiting at any
Speaker 1: given point in time, everybody benefits because if you have
Speaker 1: if you have demand high, then you have companies who
Speaker 1: are just working away at making stuff. Jobs are up.
Speaker 1: Production is up exactly. And and another point I made
Speaker 1: in this this article is that um, these companies pay
Speaker 1: taxes so indirectly, even people who can't get employment are
Speaker 1: being helped through government funded, taxpayer funded social programs. So
Speaker 1: everybody is doing really well and capitalism employees are probably
Speaker 1: paid even more to yeah when demand is high. Yeah,
Speaker 1: now there's some there's some natural checks and balances that
Speaker 1: are built into the capitalist system, like, for instance, um
Speaker 1: capital the kind of demands that companies keep wages low.
Speaker 1: You're trying to maximize profits because capitalism foster's competition. Right,
Speaker 1: You've got a lot of people out there competing for
Speaker 1: that consumer dollar that you you want to compete, and
Speaker 1: you want to keep your business efficient and trimp. One
Speaker 1: way to do that is to pay low wages as
Speaker 1: low as you can get people to work for. Right.
Speaker 1: But Smith pointed out that if you pay people slightly
Speaker 1: higher wages, they're going to be able to and this
Speaker 1: is so eighteenth century, They're going to be able to
Speaker 1: feed themselves better, and thus they'll be sturdier and be
Speaker 1: able to work harder, and all of a sudden, you're
Speaker 1: you're more efficient. You can extrapolate that into other terms,
Speaker 1: that a better paid employee should be theoretically a happier
Speaker 1: employee who will work more, be pro be more productive.
Speaker 1: That kind of right, I've seen that firsthand. Actually, as
Speaker 1: a quick aside, I worked at a Stowe Mountain park
Speaker 1: here in the great state of Georgia for many years.
Speaker 1: We had a laser show still do, and I sold
Speaker 1: as I think, you know, the glow in the dark necklaces.
Speaker 1: I had no idea I did. I did that for
Speaker 1: five summers. Man, and the guy it actually wasn't a
Speaker 1: park employee job. It was a private contractor that did this,
Speaker 1: and he paid us on commission. He paid the sixteen
Speaker 1: seventeen year old kids on commission. And man, we made
Speaker 1: I made more money than than I do. Now you're kidding, Well,
Speaker 1: if you factor in bills and things, absolutely you must
Speaker 1: have been quite a hustler. And yeah, but that's that's
Speaker 1: the long story short as we all worked our butts
Speaker 1: off to sell as many as these things we could
Speaker 1: for this guy because we made more money. And in
Speaker 1: the meantime, the park employees were schlepping popcorn and candy
Speaker 1: and stuff. They're all sneaking behind the bushes and smoking
Speaker 1: cigarettes and making out and Stuffy didn't care. They didn't
Speaker 1: care exactly, which kind of brings us to our point
Speaker 1: down the road, which actually we shouldn't get too quite yet,
Speaker 1: because we're not done talking about capitalism. Let's put that
Speaker 1: segway off and we'll pick it up later. Yeah, it
Speaker 1: sounds good at me. Okay. So um, so this is
Speaker 1: all bright shiny capitalism, right. Uh. The problem is is
Speaker 1: when you factor in like the competition, uh, and the competitiveness,
Speaker 1: you actually come up with a a survival of the
Speaker 1: fittest scenario. Darwin told you he factored in exactly. He's
Speaker 1: not the father of capitalism, but man, is he ever important.
Speaker 1: So you get all these companies competing, and then there's
Speaker 1: this thing called a correction. We know and love it
Speaker 1: as the word recession, okay, and all the recession is
Speaker 1: a decline in productivity. And the reason these declines happen
Speaker 1: is because you got you have too many poorly managed companies,
Speaker 1: You have too many bad investments so I don't know,
Speaker 1: like a mortgage backed security or something like that. You
Speaker 1: have all these things basically coming up the works, and
Speaker 1: they actually drag the market down. When the market goes
Speaker 1: into recession, these poorly managed companies and bad investments can't survive,
Speaker 1: so they actually slough off. It's kind of like a
Speaker 1: recession to capitalism is like a forest fire to the woods.
Speaker 1: You've got these raging fire that burns out all the undergrowth.
Speaker 1: It gets rid of the pests and diseases and pestilence
Speaker 1: and all that, and then the only thing left standing
Speaker 1: are these huge old trees that are allowed to flourish
Speaker 1: and grow exactly and then eventually the cycle begins again.
Speaker 1: The undergrowth comes back, and so the pest like what
Speaker 1: we've seen with the Internet, actually the big Internet boom
Speaker 1: that you know, everyone their brothers started a website, a
Speaker 1: start up and the eight I'm sorry in the nineties,
Speaker 1: and uh, same thing happened there. The giants like the
Speaker 1: Amazon dot com, so they stuck around and all the
Speaker 1: other ones fell away. So that was kind of a
Speaker 1: self correcting thing to right, that's the same thing. The
Speaker 1: reason that giants like Amazon dot Com stuck around is
Speaker 1: because they proved their worth to the economy. They provided
Speaker 1: a valuable service that the consumers judged, Hey, we like this,
Speaker 1: we want this, We're gonna give it our money. So
Speaker 1: Amazon survived. Other ones they were bad ideas, for better
Speaker 1: or worse, they didn't appeal to people, so they fell away.
Speaker 1: That's exactly what we're going through right now. The recession.
Speaker 1: This makes me think of recession is actually kind of cool.
Speaker 1: It is, it's a very natural component of capitalism. Here's
Speaker 1: the thing capital capitalism in the United States, it's not
Speaker 1: It doesn't have the full faith of the US government. Normally,
Speaker 1: when we hit a recession, the government goes into socialist mode.
Speaker 1: We start buying stakes and companies and start, you know,
Speaker 1: flooding the market with with all sorts of money and
Speaker 1: adjusting interest rates, that kind of thing. So here's where
Speaker 1: we enter how the US is not a capitalist, free
Speaker 1: market economy. I love the examples he used in this
Speaker 1: article too, because I don't think many people ever think
Speaker 1: of these is bucking capitalism and the free market, but
Speaker 1: it's exactly what it's done. Yeah. Well, the obvious one
Speaker 1: is the SEC security, the Securities Exchange Commission. Yeah, and
Speaker 1: basically they watched the stock market. And the reason the
Speaker 1: SEC exists and and I say in the article, the
Speaker 1: only reason why, or the the very fact that the
Speaker 1: SEC he exists. It shows that capitalism in America isn't
Speaker 1: based on a free market economy. Um. But the reason
Speaker 1: the SEC exist is because in the US, for a
Speaker 1: hundred or two hundred years almost uh, this capitalist economy
Speaker 1: eventually devolved into its worst form of itself. You had
Speaker 1: like Robert Barons that were, you know, as Iron ran
Speaker 1: the novelist. Capitalist novelists would argue, these titans of industry
Speaker 1: helped build modern America and modern America's economy. But as
Speaker 1: somebody who was maybe you know, happy with labor, on
Speaker 1: the side of labor would say, yes, they did, but
Speaker 1: they built it through the direction of the suffering working class,
Speaker 1: on the backs of the working class exactly. So you
Speaker 1: you've got two sides of the same coin. And ultimately,
Speaker 1: if you look at the federal government's track record, they
Speaker 1: usually side on, you know, the suffering, alleviating suffering of
Speaker 1: the working class. They're like, thank you very much, Robert
Speaker 1: Baron for endowing this entire city, but you know, we're
Speaker 1: gonna have to step in. And they had the Securities
Speaker 1: and Exchange Commission was a big one. What else is there?
Speaker 1: Uh I know, another one was the UM. Well it's
Speaker 1: the government getting involved in big companies like Carnegie Steel
Speaker 1: and Standard Oil, and the railroad's union union, Pacific Railroad
Speaker 1: and uh, big major corporations that all of a sudden,
Speaker 1: the government was getting putting their finger in their pie
Speaker 1: and saying, you guys got a little too much power.
Speaker 1: We need to step in and kind of regulate you
Speaker 1: a little bit. Yeah, because that competition from a hundred
Speaker 1: plus years of unread unregulated capitalism led to some really
Speaker 1: nefarious business practices like um, you know, corporations saying that
Speaker 1: they had uh, saying to their investors that they'd made
Speaker 1: you know, seventeen billion dollars or back then, seventeen million
Speaker 1: dollars and profits, but turned around to the government and
Speaker 1: called or you know, wrote off eleven million in losses.
Speaker 1: Things like that, So you create the sec or monopolies.
Speaker 1: Monopolies were the first one, Like you said, the railroads
Speaker 1: and steel companies all that they had too much power
Speaker 1: and they were all basically running the show in their
Speaker 1: their industry. If you wanted steel, you had to go
Speaker 1: to this one company. If you wanted oil, you had
Speaker 1: to go to this one company, so they could set
Speaker 1: whatever prices they want. And really the first appearance of
Speaker 1: government regulation into the free market was the Sherman Antitrust
Speaker 1: Act of eighteen what okay, good enough, but that was
Speaker 1: that was hardly the end. You've got um food packagers, right,
Speaker 1: the f d A in itself is sort of you know,
Speaker 1: sort of the same thing, well big time. I mean, really,
Speaker 1: under a free market system, somebody should be able to
Speaker 1: put as as many you know, rat excrements as possible. Yeah,
Speaker 1: you and I know that there's a very finite amount
Speaker 1: that can be allowed in there. Um, So the f
Speaker 1: d A regulates business, it interferes with the free market.
Speaker 1: The same thing with the Federal Trade Commission there. They
Speaker 1: were actually created to encourage competition among corporations and prevent monopolies.
Speaker 1: Like that's pretty much their soul, their sole reason for existing,
Speaker 1: even the very idea of setting a minimum wage is
Speaker 1: the government getting involved in the business. Yeah, it really isn't.
Speaker 1: I Mean, it took a lot of a lot of
Speaker 1: labor strikes, a lot of violent clashes with police, the
Speaker 1: anarchists were coming up and for a little while there,
Speaker 1: um and and basically ultimately government fell on the side
Speaker 1: of the people. If you really look at it again,
Speaker 1: the federal government's track record over the last hundred or
Speaker 1: so years, they've ultimately sided with the people. I encourage
Speaker 1: you to look at the record, my friends. Yeah, the
Speaker 1: records out there. I mean, it's it's in the faces
Speaker 1: of the of the happy employees at the FTC and
Speaker 1: the FDA and the SEC. You go look those people
Speaker 1: in the eye, and you can think the government cares
Speaker 1: about me. Yeah. So, so what do we have though?
Speaker 1: If if it's not a free market, what would you
Speaker 1: call it? I would call it a managed economy? And
Speaker 1: I wouldn't be the only one to call it that.
Speaker 1: You didn't come up with that term, I didn't. Um,
Speaker 1: it's a managed economy is basically what it's what we have.
Speaker 1: You have like a free market, but then there's some
Speaker 1: government regulation and oversight and hopefully in all the right places. Yeah.
Speaker 1: So the next time somebody asks you what kind of
Speaker 1: economy does the United States have? Don't say free market?
Speaker 1: Don't you say we have a managed economy? Right? And
Speaker 1: if they want to know what you're talking about, tell
Speaker 1: them to go type in is a free market free
Speaker 1: if it's regulated? On how stuff works? Dot com? And
Speaker 1: then punch him in the head exactly and stick around
Speaker 1: to find out where Chuck got his current gambling problem.
Speaker 1: But first, so Chuck, where's your gambling problem? Cover? I've
Speaker 1: seen you. I made like a hundred and fifty bucks
Speaker 1: off you during this podcast. How where's it from. Well,
Speaker 1: as you know, Josh, I have the jimmy legs. I
Speaker 1: have the jumpy legs I have I think the technical
Speaker 1: term is uh r l S. Restless leg syndrome is
Speaker 1: kicking you as we speak. It hurts, but it goes
Speaker 1: a long way to write. Well, Josh, I have this
Speaker 1: uh this uh malady, and I'm on some medication to
Speaker 1: help control my my jimmy legs. And that medication is
Speaker 1: a side effect, and one of them is a compulsive
Speaker 1: activity like gambling. Yeah, so I had the jimmy legs
Speaker 1: and next thing you know, I'm like heading out to
Speaker 1: the Cherokee, North Carolina every weekend to gamble. That's great. Well,
Speaker 1: you know, if I had a kid, I'd say, you're
Speaker 1: putting it through college. What's what's this medication? Uh? Well,
Speaker 1: I can't divulge the name on the air, but it's
Speaker 1: cured my jimmy legs. But now I'm I'm way in
Speaker 1: the hole. That's great. The casinos, Well, thank you, big Pharma.
Speaker 1: I'm gonna go spend this hundred fifty bucks on scratch
Speaker 1: off tickets. Right. And you can read actually about this
Speaker 1: and at a very cool article called The Top ten
Speaker 1: weirdest uh side effects of drugs that you can take
Speaker 1: to make you feel better, also known as Top ten
Speaker 1: weird prescription drug side effects. You can find that on
Speaker 1: how stuff works dot com. For more on this and
Speaker 1: thousands of other topics, visit how stuff works dot com.
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